KIA Gets China Stock Market Quota

Kuwait’s sovereign wealth fund has obtained approval to initially invest up to $300 million in China’s securities market.

Kuwait Investment Authority has received a $300 million quota to buy yuan-denominated stocks and bonds in mainland China’s securities market, Kuwait’s official news agency Kuna has reported.

China’s State Administration of foreign Exchange (SAFE) has identified Kuwait’s sovereign wealth fund as a qualified foreign institutional investor (QFII), and hence KIA can initially invest up to $300 million in China’s stock market.

KIA has however applied for the full $1 billion investment quota, which is the maximum amount that a single QFII can receive from SAFE, according to the report. If approved, the sovereign fund can increase its quota on a monthly basis till it reaches $1 billion.

The SAFE approval came two months after KIA received its QFII status from China Securities Regulatory Commission, the report said.

The Chinese authority has only given QFII status to 129 foreign institutions as of March 9, with a combined investment quota of $24.55 billion. KIA is the second sovereign wealth fund from the region, after the Abu Dhabi Investment Authority, to obtain this quota.

The Kuwaiti investment fund opened an office in Beijing in October last year- its first overseas office since it set up an office in London in 1953.

“The opening of the Kuwait Investment Representative Office (KIRO) in Beijing reflects the reality of the new world order,” Bader Al Sa’ad, KIA’s managing director said during its inauguration. “Wealth creation and accumulation has shifted from the West to the East; from the North to the South,” he said.

The fund’s exposure to Greater China- mainly Hong Kong- began 10 years ago, and increased nearly five times from $2.2 billion to $10 billion, Sa’ad said. KIA’s investments in Mainland China only started five years ago, and has gone from zero to $5.6 billion, he added.

“During this time, we are pleased to have participated as cornerstone investors in ICBC, Agricultural Bank of China and, most recently, in CITIC Securities,” he said.